IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i6p5576-d1104120.html
   My bibliography  Save this article

The Impact of Corporate Governance and International Orientation on Firm Performance in SMEs: Evidence from a Developing Country

Author

Listed:
  • Kankan Wen

    (School of Chinese Language and Literature, Ningxia Normal University, Guyuan 756000, China)

  • Noha Alessa

    (Department of Accounting, College of Business and Administration, Princess Nourah bint Abdulrahman University, P.O. Box 84428, Riyadh 11671, Saudi Arabia)

  • Karifala Marah

    (Department of Economics and Management, Zhejiang Normal University, Jinhua 321017, China)

  • Kwame Kyeremeh

    (Department of Publishing Kwame Nkrumah, University of Science and Technology, Kumasi AK-385-1973, Ghana)

  • Emmanuel Sampson Ansah

    (Department of Economics and Management, Zhejiang Normal University, Jinhua 321017, China)

  • Vincent Tawiah

    (DCU Business School, Dublin City University, D09 E432 Dublin, Ireland)

Abstract

Small and Medium-Scale Enterprises (SMEs) have been adopting corporate governance and international strategies to improve performance. However, little is known about the success of corporate governance practices and the international orientation of SMEs, especially in developing countries. Therefore, the objective of this paper is to examine the influence of corporate governance practices and international orientation on the performance of SMEs in a developing country. We used a survey to hand-collect data from 270 SMEs in Ghana in 2022. Consistent with prior studies, we perform robust reliability tests, including confirmatory factor analysis and the Cronbach alpha test. Further, we use the structural equation modelling to test the hypothesis of whether corporate governance and international orientation affect firm performance in SMEs. Our results are as follows. First, we found that international orientation drives good corporate governance practices, and this exerts a positive influence on firm performance. Second, we established that international orientation positively and significantly moderates the relationship between corporate governance and firm performance. The results imply that engaging in the international market offers new knowledge to SMEs in developing countries. Therefore, investors and the government should develop strategies and policies that support the internationalization of SMEs in developing countries.

Suggested Citation

  • Kankan Wen & Noha Alessa & Karifala Marah & Kwame Kyeremeh & Emmanuel Sampson Ansah & Vincent Tawiah, 2023. "The Impact of Corporate Governance and International Orientation on Firm Performance in SMEs: Evidence from a Developing Country," Sustainability, MDPI, vol. 15(6), pages 1-16, March.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:6:p:5576-:d:1104120
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/6/5576/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/6/5576/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, vol. 10(5), pages 703-728, November.
    2. Isaac Francis Antwi & Carla Carvalho & Cecília Carmo, 2022. "Corporate Governance research in Ghana through bibliometric method: review of existing literature," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2088457-208, December.
    3. Nohade Nasrallah & R. El Khoury, 2022. "Is corporate governance a good predictor of SMEs financial performance? Evidence from developing countries (the case of Lebanon)," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 12(1), pages 13-43, January.
    4. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 23-32, March.
    5. Schweizer, Roger, 2012. "The internationalization process of SMEs: A muddling-through process," Journal of Business Research, Elsevier, vol. 65(6), pages 745-751.
    6. Jane W. Lu & Paul W. Beamish, 2001. "The internationalization and performance of SMEs," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 565-586, June.
    7. Ciszewska-Mlinaric, Mariola & Obloj, Krzysztof & Wasowska, Aleksandra, 2016. "Effectuation and causation: Two decision-making logics of INVs at the early stage of growth and internationalisation," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 21(3), pages 275-297.
    8. Irmela F. Koch‐Bayram & Georg Wernicke, 2018. "Drilled to obey? Ex‐military CEOs and financial misconduct," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 2943-2964, November.
    9. Hsu, Wen-Tsung & Chen, Hsiang-Lan & Cheng, Chia-Yi, 2013. "Internationalization and firm performance of SMEs: The moderating effects of CEO attributes," Journal of World Business, Elsevier, vol. 48(1), pages 1-12.
    10. Asif Mahmood & Rana Tahir Naveed & Naveed Ahmad & Miklas Scholz & Muhammad Khalique & Mohammad Adnan, 2021. "Unleashing the Barriers to CSR Implementation in the SME Sector of a Developing Economy: A Thematic Analysis Approach," Sustainability, MDPI, vol. 13(22), pages 1-20, November.
    11. Orly Levy & Schon Beechler & Sully Taylor & Nakiye A Boyacigiller, 2007. "What we talk about when we talk about ‘global mindset’: Managerial cognition in multinational corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(2), pages 231-258, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Child, John & Hsieh, Linda H.Y., 2014. "Decision mode, information and network attachment in the internationalization of SMEs: A configurational and contingency analysis," Journal of World Business, Elsevier, vol. 49(4), pages 598-610.
    2. Morais, Flávio & Ferreira, João J., 2020. "SME internationalisation process: Key issues and contributions, existing gaps and the future research agenda," European Management Journal, Elsevier, vol. 38(1), pages 62-77.
    3. D’Angelo, Alfredo & Buck, Trevor, 2019. "The earliness of exporting and creeping sclerosis? The moderating effects of firm age, size and centralization," International Business Review, Elsevier, vol. 28(3), pages 428-437.
    4. Vivian Peuker Sardon Steinhäuser & Fábio de Oliveira Paula & Teresia Diana Lewe van Aduard Macedo-Soares, 2021. "Internationalization of SMEs: a systematic review of 20 years of research," Journal of International Entrepreneurship, Springer, vol. 19(2), pages 164-195, June.
    5. Hunt, Richard A. & Song, Yue & Townsend, David M. & Stallkamp, Maximilian, 2021. "Internationalization of entrepreneurial firms: Leveraging real options reasoning through affordable loss logics," Journal of Business Research, Elsevier, vol. 133(C), pages 194-207.
    6. Bagheri, Mahshid & Mitchelmore, Siwan & Bamiatzi, Vassiliki & Nikolopoulos, Konstantinos, 2019. "Internationalization Orientation in SMEs: The Mediating Role of Technological Innovation," Journal of International Management, Elsevier, vol. 25(1), pages 121-139.
    7. Boehe, Dirk Michael, 2014. "Strategic hedging: Evidence from Brazilian exporters," Journal of World Business, Elsevier, vol. 49(3), pages 290-300.
    8. Dasí, Àngels & Iborra, María & Safón, Vicente, 2015. "Beyond path dependence: Explorative orientation, slack resources, and managerial intentionality to internationalize in SMEs," International Business Review, Elsevier, vol. 24(1), pages 77-88.
    9. Alice Schmuck & Katarina Lagerström & James Sallis, 2022. "Turning the Tables: The Relationship Between Performance and Multinationality," Management International Review, Springer, vol. 62(1), pages 3-26, February.
    10. Luo, Xueming & Zheng, Qinqin, 2018. "How firm internationalization is recognized by outsiders: The response of financial analysts," Journal of Business Research, Elsevier, vol. 90(C), pages 87-106.
    11. Phuong V. Nguyen & Hien Thi Ngoc Huynh & Hoa Doan Xuan Trieu & Khoa T. Tran, 2019. "Internationalization, Strategic Slack Resources, and Firm Performance: The Case Study of Vietnamese Enterprises," JRFM, MDPI, vol. 12(3), pages 1-24, September.
    12. Jaeyoung Cho & Jangwoo Lee, 2020. "Speed of FDI expansions and the survival of Korean SMEs: the moderating role of ownership structure," Asian Business & Management, Palgrave Macmillan, vol. 19(2), pages 184-212, April.
    13. Benito-Osorio, Diana & Colino, Alberto & Guerras-Martín, Luis Ángel & Zúñiga-Vicente, José Ángel, 2016. "The international diversification-performance link in Spain: Does firm size really matter?," International Business Review, Elsevier, vol. 25(2), pages 548-558.
    14. Jaeyoung Cho & Jangwoo Lee, 2018. "Internationalization and longevity of Korean SMEs: the moderating role of contingent factors," Asian Business & Management, Palgrave Macmillan, vol. 17(4), pages 260-285, September.
    15. Costa, Eric & Soares, António Lucas & de Sousa, Jorge Pinho, 2016. "Information, knowledge and collaboration management in the internationalisation of SMEs: A systematic literature review," International Journal of Information Management, Elsevier, vol. 36(4), pages 557-569.
    16. Niittymies, Aleksi & Pajunen, Kalle, 2020. "Cognitive foundations of firm internationalization: A systematic review and agenda for future research," International Business Review, Elsevier, vol. 29(4).
    17. Marina Dabić & Jane Maley & Leo-Paul Dana & Ivan Novak & Massimiliano M. Pellegrini & Andrea Caputo, 2020. "Pathways of SME internationalization: a bibliometric and systematic review," Small Business Economics, Springer, vol. 55(3), pages 705-725, October.
    18. Sandberg, Susanne & Sui, Sui & Baum, Matthias, 2019. "Effects of prior market experiences and firm-specific resources on developed economy SMEs' export exit from emerging markets: Complementary or compensatory?," Journal of Business Research, Elsevier, vol. 98(C), pages 489-502.
    19. Nadine Levratto & Clarisse Nguedam Ntouko & Maarouf Ramadan, 2017. "Institutions and firms’ internationalization: an empirical analysis on three Middle East countries," EconomiX Working Papers 2017-37, University of Paris Nanterre, EconomiX.
    20. Acedo, Francisco J. & Coviello, Nicole & Agustí, María, 2021. "Caution ahead! The long-term effects of initial export intensity and geographic dispersion on INV development," Journal of World Business, Elsevier, vol. 56(6).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:6:p:5576-:d:1104120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.